Wayfair to Lay Off About 870 Workers |

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said it would lay off about 870 employees as part of efforts to manage operating costs and realign investment priorities.

The reduction represents about 5% of the company’s global workforce and about 10% of its corporate team, Wayfair said Friday. The company had previously announced a hiring freeze, which it said began in May.

Shares fell more than 17% in Friday trading. The stock has lost more than two-thirds of its value this year.

The Boston-based furniture and home-goods company said it expects the layoffs to cost between $30 million and $40 million, consisting largely of employee severance and benefits. These costs are expected to be reflected in the company’s current quarter, it said.

Chief Executive

Niraj Shah

told employees in an email announcing the layoffs that the company had spent several years staffing up to match the growth to both e-commerce and home goods, fueled by shoppers sprucing up their homes during the pandemic. “I personally pushed hard to hire a strong team to support that growth,” he wrote. “This year, that growth has not materialized as we had anticipated. Our team is too large for the environment we are now in, and unfortunately we need to adjust.”

Wayfair’s layoff announcement comes two weeks after it reported its fourth consecutive quarter of losses. The company was profitable for a brief period in 2020 and 2021. Before the pandemic, Wayfair in early 2020 laid off about 500 workers as it grappled with losses.

Wayfair is among several online retailers that enjoyed rapid growth during the health crisis and are now struggling as consumers have returned to shopping in stores, and high inflation leads price-conscious customers to hold off on discretionary purchases. Wayfair’s number of active customers—those who placed an order within the past 12 months—was down 24% to 23.6 million in the second quarter.

Many retailers are coping with shifts in consumer spending by cutting prices and running more sales, which led to online prices dropping for the first time in more than two years in July, according to data from Adobe Analytics.

They are also cutting jobs. Online secondhand marketplace

ThredUp

said Monday it was laying off 15% of its corporate workforce and closing one of its processing centers, after reporting that its losses had widened during the previous quarter. Other companies including

Shopify Inc.,

Warby Parker Inc.

and

Stitch Fix Inc.

have reduced their head counts this year.

Wayfair said it is making substantial reductions in its third-party labor costs.

Write to Charity L. Scott at Charity.Scott@wsj.com and Connor Hart at connor.hart@wsj.com

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